October 23rd, 2012
in Gary's blogging
Midday Market Commentary For 10-23-2012
I suppose if you call for a down market long enough, like I have been doing for months, you will eventually be correct. This market has been held up by toothpicks for so long I can't even remember when I first made that analogy. This is a crazy market as there are signs pointing the way back up as well as those painting a very bleak picture. “Where Do Stocks 'Belong'?” is the question many are asking, for one I think they are overpriced.
As of noon the markets have paused for a consolidation of sorts and the volume deteriorates more.
The DOW fell to a major support of 13080 and backed off several points and continued down to challenge 13080 again. Correspondingly the SP500 dropped below its next support at 1419 soon after the market opened and is headed for another minor one at 1398 which is 12 points away.
The Russell 2000 opened just above the same support level (39.26) and also went below and both have remained there all morning. SPY, like $RUT, gaped down at the open and quickly fell below its support at 141.89 and has also remained there for the morning. This is not a good sign and we need to see the averages improve soon if the bull pundits are to get their way.
The current support, now a resistance, is an important one that needs to be challenged soon, but be careful of a bear trap as SPY and the $RUT close the gaps made this morning.
The RRR** was very narrow at the opening bell and continued into the midday session, just as it has been for the past several months. Any trades today will probably end up on the unprofitable side as long as this market remains flat or continues to have low volume. A guess from yesterday's close that the market would be down today could have been profitable, but it is still guessing.
I have issues with some traders in that they are saying there are setups for day trading. This is true enough, but the trading range is so narrow that way too money has to be put on the table just to get back meager gains.
Swing trading is also at your own risk and being the market is at a crossroads of sorts, I would prefer to sit on my hands rather than risk guessing incorrectly. Eric Parnell said it correctly “all of the prevailing economic forces today point to a stock market that should be in decline” and “unstable economic and market conditions are becoming increasingly tumultuous”. He goes on to say in his article, 50 Shades Of Stock Market Grey, “How can you best participate in any further upside while keeping things as clean and risk controlled as possible?”.
Guessing where the market is going to be tomorrow or next week, at this time anyway, is a foolish endeavor.
The DOW at 12:15 is at 13118 down 227 or -1.71%.
The 500 is at 1413 down 20 or -1.40%.
The $RUT is at 810.78 down 9.72 or -1.18%.
SPY is at 141.47 down 1.94 or -1.35%.
The longer trend is up, the past week's trend is bearish and the current bias is down.
WTI oil was down today and is at 86.41 trading between 89.32 and 85.80 and the bias is neutral.
Brent crude was down today and is at 108.14 trading between 115.20 and 107.45 and the bias is negative.
Gold is down this morning. Currently trading down at 1709.28, trading range is between 1737.30 and 1707.54 with a neutral bias.
Dr. Copper is at 3.57 down from 3.64 earlier.
The US dollar rose from 79.54 earlier to 80.15 and is currently trading at 80.08.
** RRR = Risk Reward Ratio
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Written by Gary